Filtered by Subscriptions: Australia & New Zealand Economics Use setting Australia & New Zealand Economics
After contributing 0.5 percentage points to the annual rate of GDP growth in Australia in each of the past two years, it looks as though dwellings investment will add almost nothing to growth this year. This is one reason why we believe that 2017 will be …
13th January 2017
While the slower-than-expected growth in retail sales in November does suggest that the household sector may have lost a bit of momentum late in the fourth quarter, the strong start to the quarter means real consumption growth probably still rebounded. … …
10th January 2017
The first trade surplus since March 2014 isn’t quite as good as it looks as it’s due to a surge in the prices of exports rather than the volume of exports. This means that net exports were probably still a large drag on real GDP growth in the fourth …
6th January 2017
The recent weakening in the Australian dollar to a seven-month low against the US dollar won’t boost activity and inflation by as much as you may think as it has not been matched by a weakening in the broader dollar trade-weighted index. What’s more, if …
The range of possible economic outcomes for next year are wider than usual and it is possible that 2017 proves to be a sweet spot for both Australia and New Zealand. But it seems more likely that a slowdown in economic growth in China and a corresponding …
22nd December 2016
The further strengthening in economic growth in the third quarter increases the chances that the Reserve Bank of New Zealand won’t need to cut interest rates further. But it is probably too soon to conclude that New Zealand’s low inflation problem has …
21st December 2016
The 0.5% q/q fall in GDP in the third quarter and the weak tone of October’s international trade data have raised the chances that Australia will experience its first recession in 25 years. We wouldn’t completely rule out the possibility of a second …
The ratings agencies have shown that they are full of Christmas cheer by maintaining Australia’s AAA credit rating even though the Mid-Year Economic and Fiscal Outlook revealed that the budget deficit will be a cumulative $10bn higher over the next four …
19th December 2016
Even if the ratings agencies were to take away Australia’s AAA credit rating immediately after the publication of the Mid-year Economic and Fiscal Outlook on Monday, which we suspect will reveal that the budget forecasts are moving further away from …
16th December 2016
The improvement in jobs growth in recent months provides further evidence that the fall in GDP in the third quarter was a blip rather than anything more worrying. But while the lower underemployment rate does suggests that the excess labour supply is …
15th December 2016
The recent rise in the share of people working part-time but who would like to work longer will continue to restrain wage growth for another couple of years yet. This part-time problem means that a further fall in the unemployment rate is unlikely to lead …
14th December 2016
The fall in consumer confidence to an eight-month low in December shows that households have been spooked by the decline in GDP in the third quarter. While confidence is still consistent with a decent rate of consumption growth, lower sentiment is not …
The rebound in business confidence in November supports our view that Australia is unlikely to fall into its first recession in 25 years in the fourth quarter. But the ABS house price data for the third quarter imply that the housing market is not as hot …
13th December 2016
The fall in GDP in the third quarter means that the data for the fourth quarter will determine whether or not Australia succumbs to its first recession in 25 years. We think it will escape, but only just. Either way, the bigger picture is that GDP growth …
9th December 2016
The unexpected widening in the trade deficit in October is worrying as it implies net exports may be a big drag on GDP growth in the fourth quarter. After yesterday’s news that GDP contracted in the third quarter, this means the chances of a recession …
8th December 2016
The 0.5% q/q fall in GDP in the third quarter has raised the possibility that the first recession, defined as two consecutive quarters of falling output, in 25 years has begun. But while the GDP data confirm that we have been right to be more concerned …
7th December 2016
The 0.5% q/q fall in GDP in the third quarter is unlikely to mark the start of a recession as GDP will probably rebound in the fourth quarter. Even so, it highlights that the economy is not strong enough to generate much more inflation. This supports our …
After leaving interest rates on hold at 1.5% today, the Reserve Bank of Australia remained fairly optimistic on the outlook for activity even though the economy may have contracted in the third quarter. We’re not too concerned about the outlook either, …
6th December 2016
If the Australian economy did indeed stagnate or contract in the third quarter, it needs to be seen in the context of the unusual strength in the previous two quarters. This means there’s probably no need to sound the recession alarm, although a softening …
2nd December 2016
The stronger-than-expected rise in retail sales in October will be a welcome sight for retailers in the lead up to the all-important Christmas spending period and suggests that the probable slowdown in real consumption growth in the third quarter may not …
The weak third-quarter private capital expenditure survey adds to other evidence that suggests the economy may not have grown at all in the third quarter. It also confirms that the transition towards non-mining investment is taking place at a snail’s …
1st December 2016
The Reserve Bank of Australia is unlikely to play either Santa or Scrooge at its meeting on Tuesday 6th December, as it will almost certainly leave interest rates on hold at 1.5%. And we believe that the markets have got ahead of themselves by starting to …
30th November 2016
It’s now possible that the Australian economy didn’t grow at all in the third quarter. It may even have contracted. That would be hard to ignore, especially when jobs growth has slumped to a two-year low at the same time. So it is worth considering …
25th November 2016
The recent earthquake in New Zealand may put a small dent in activity in the near-term, but it won’t prevent the economy from growing by around 3.5% next year. In fact, the extra boost to activity from the necessary reconstruction work could mean that GDP …
24th November 2016
Financial markets look to have jumped the gun by concluding that the chance of a further interest rate cut in Australia has all but vanished. We think that the weak outlook for wage growth may yet prompt the central bank to cut rates further. … Wage …
18th November 2016
While employment increased in October for the first time since July, revisions to September’s figures meant that the annual rate of employment growth fell to a two-year low of 0.9% y/y, which will do little to allay growing concerns about the health of …
17th November 2016
The recent leap in the prices of the main commodity exports of Australia and New Zealand will boost domestic demand in both economies, but it is unlikely to lead to much faster wage growth and much higher underlying inflation. That’s because businesses …
15th November 2016
While Trump’s election win is still causing some uncertainty in financial markets, attention in New Zealand has swiftly moved to the kiwi dollar following comments by Governor Wheeler that the RBNZ has an “open mind” to the possibility of using foreign …
11th November 2016
The Reserve Bank of New Zealand showed that business carries on as usual with Trump as US President as today it met its previous pledge to cut interest rates from 2.00% to 1.75%. What’s more, yesterday’s financial market volatility didn’t stop it from …
10th November 2016
The now-probable election of Donald Trump as US President will continue to send shockwaves through the financial markets for a while yet. But we suspect it won’t be long before the bulk of these moves are reversed as the election of Trump as US President …
9th November 2016
Despite the modest fall in the Westpac measure of consumer confidence in November, confidence levels suggest that any slowdown in consumption growth won’t be too severe. More worryingly, the rise in the index measuring unemployment expectations adds to …
While the structural shift towards part-time employment has further to run, an easing in economic growth in industries with a higher than average share of part-time employees suggests that the speed at which part-time employment is rising may soon peak. … …
7th November 2016
Should Donald Trump pull off a surprise victory in Tuesday’s US Presidential election, equities, bond yields, commodity prices and the Australian and New Zealand dollars would probably all fall. But those moves would probably be reversed before long as it …
4th November 2016
While the forecasts published in the RBA’s latest Statement on Monetary Policy have hardly changed since the August edition, the tone is much more balanced and could probably even be described as upbeat. In other words, the RBA is increasingly thinking …
The outright fall in real retail sales in the third quarter is consistent with a further slowdown in real consumption growth. That said, the better-than-expected rise in nominal sales in September means there is at least some momentum in consumer spending …
We expect that the Reserve Bank of New Zealand will follow through on its commitment for further policy easing by cutting interest rates from 2.00% to 1.75% at its policy meeting on Thursday 10 th November, particularly if the outcome of Tuesday’s US …
3rd November 2016
The recent leap in coal prices explains a lot of the sharp narrowing in the trade deficit to a 20-month low in September. If coal prices stay at current levels the deficit could even be wiped out sometime next year, but that’s a very big “if”. … …
While employment growth was stronger than expected in the third quarter, wage growth remained worryingly weak. This will do little to allay the RBNZ’s concerns about the inflation outlook and as a consequence does not change our view that the RBNZ will …
2nd November 2016
The decision by the Reserve Bank of Australia to leave interest rates at 1.5% today may fuel some speculation that the next move in rates will be up, although not for a long time. That possibility shouldn’t be ignored, but we’re not convinced that the low …
1st November 2016
Both headline and underlying inflation in Australia will probably rise over the next year and, by boosting economic growth and reducing spare capacity, the recent leap in commodity prices raises the chances of underlying inflation returning to the 2-3% …
28th October 2016
While the third quarter inflation data suggest that there is an outside chance that the Reserve Bank of Australia will cut interest rates from 1.50% to 1.25% at its policy meeting on Tuesday 1 st November, we expect that the Bank will leave rates on hold. …
27th October 2016
Ignore the larger-than-expected rise in headline CPI inflation in the third quarter, what really matters is that underlying inflation was weaker than the RBA expected. It probably wasn’t weak enough to prompt the Bank to cut interest rates from 1.5% at …
26th October 2016
The recent rise in the prices of some key commodity exports will go some way to boosting the national income of both Australia and New Zealand. The surge in the price of coal to a three-and-a-half-year high will boost the coffers of Australian coal …
25th October 2016
While the Reserve Bank of Australia would do well to ignore the recent falls in employment, it will be getting more concerned that the rising share of employees working part-time will keep wage growth lower for longer. That would mean the RBA’s low …
21st October 2016
The RBA may not be too worried by the further decline in employment in September since the data are subject to a couple of distortions and since the unemployment rate fell to 5.6% from 5.7%. But the labour market is edging closer to the “deterioration” …
20th October 2016
The fall in CPI inflation to 0.2% in the third quarter from 0.4% in the second quarter is in line with the RBNZ’s forecast and means the Bank will follow through on its suggestion that interest rates will need to be cut from 2.00% to 1.75% at the November …
18th October 2016
While the recent leap in bond yields in Australia has been larger than the rise in the US, we still believe that over the next couple of years bonds in Australia will outperform those in the US. Yields in Australia will rise, but they will stay low by …
14th October 2016
The further rise in the Westpac measure of consumer confidence in October suggests that the rebound in retail sales in August will be sustained in the coming months. That said, the survey does indicate that house price inflation will soon slow. … Consumer …
12th October 2016
The inflation figures for the third quarter would need to be much weaker than the Reserve Bank of Australia expects in order to prompt a cut in interest rates to 1.25% at November’s policy meeting. While we don’t think inflation was weak enough in the …
11th October 2016
The recent run of better-than-expected economic news means that GDP growth in Australia probably held up fairly well in the third quarter. However, given that there are still notable headwinds, it seems more likely that the economy will weaken, rather …
7th October 2016
